December Day Of Dread For UK Gambling Giant Entain

Amid a cauterwal of crises–the biggest money laundering fine in gambling history, for example, bolshie US investors, an over-ambitious expansion strategy, regulatory headwinds, even a run of “poor” sporting results–, this upcoming Monday, December 4 may prove to be a Day of Dread for UK gambling giant Entain.

For it’s then, at the start of next week, that BetMGM–hitherto the stand-out Golden Child of Entain’s otherwise poorly performing portfolio–is set to deliver an all-important Trading Update.

And its outcome could deliver either salvation – or the body blow that terminates the rule of the company’s current leadership, most prominently, Chair Barry Gibson and CEO Jette Nygaard-Andersen.

The duopoly weren’t offered any favours this week when investment gurus Goldman Sachs delivered the proverbial hob-nailed boot to the financial face by announcing that Entain–owner of Ladbrokes Coral, bwin, Sportingbet, PartyCasino, et al, and, of course, co-owner of the BetMGM sportsbook with US gambling leviathan MGM Resorts International–was now “a selling” and not “a buying” proposition.

Manhattan-headquartered Goldman Sachs cited “concerns over [Entain’s] business growth” and, specifically, weak iGaming performance as principal drivers for downgrading Entain, slashing its price target from 1,450 pence-per-share to a relatively paltry 820 pence.

Blood Simple

But the blood simple truth of the matter is that the gaming zeitgeist is clearly running against the UK gambling giant; one of this country’s Big Four, completed by Flutter, bet365 and 888.

How could it be any other way with Entain just agreeing to pay a massive financial penalty of £585 million (US$742.03m), in the form of a so-called DPA, or Deferred Prosecution Agreement, to settle a historic bribery and money laundering scandal in Turkey when it was operating as GVC Holdings.

In addition Entain’s current Gibson/Nygaard-Andersen administration has also agreed to make a charitable donation of £20 million (US$25.36m) and contribute £10 million (US$12.68m) to costs incurred by the Crown Prosecution Service and His Majesty’s Revenue and Customs.

The criminal money laundering activities of GVC Holdings in Turkey, rebranded Entain in December, 2020, has been extensively covered in this publication and is already well known to iGamingFuture readers.

Entain shares have sunk by almost 40 percent this year, a mighty, mighty hit that would hole many a gaming ship of state below the wagering waterline
But perhaps less aired are fresh concerns over the profitability of BetMGM.

Coup de Grâce

Until recently we were being told that the Entain-MGM Resorts joint-venture was approaching positive EBITDA, that it was lying a comfortable third in the US sportsbook race behind Flutter’s FanDuel and sparky DraftKings, that it was even the most successful sportsbook in the 17-odd markets where it was operating in The States.

Now it seems all of this, come December 4, is up for reinterpretation.

Certainly–with MGM Resorts International buying Swedish-origin iGaming technology platformistas LeoVegas for US$604 million (£476.17m) last year and deciding to launch BetMGM in the UK with them–and not Entain–earlier this year–it would appear that the Entain-MGM relationship is strained, if not fractured.

Add to this Entain Central Europe’s over-the-top €750 million (£591.28m) acquisition of Poland’s dominant STS gambling operator this summer — a move which drew the ire of one of Entain’s top US stakeholders, Eminence Capital, who described it as “dilutive and value-destructive”.

Overall, amid this sea of troubles, Entain shares have sunk by almost 40 percent this year, a mighty, mighty hit that would hole many a ship of state below the waterline.

Monday, and the BetMGM Trading Update, could be the torpedo that delivers the coup de grâce.

What’s for certain is that Entain and its embattled captain Jette Nygaard-Andersen are going to need all hands on deck — unless they decide to jump ship come December 5.

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